All posts in category Greece

Hello everyone, and welcome to our live blog of the European Central Bank’s first monetary policy decision of 2013 with Brian Blackstone in Frankfurt and David Cottle in London.

The ECB kept its monetary settings unchanged today, although there are plenty of forecasters and commentators who think one more cut to the key refinancing rate could be in the offing later this year given the gloomy prognosis for the euro zone’s economy.

However, the consensus that the ECB will need to see more data before committing itself has proved correct.

The press conference has now ended and this blog is now closed.

7:47 am (EST)

Welcome... interest rates left unchanged.

WSJ Staff

Welcome to our live blog... the ECB has left its main interest rate unchanged.

The number of people out of work in Greece continued to rise in October, official data showed Thursday, underscoring the deep impact the country’s debt crisis and austerity program are having on its economy.

Greece’s statistics agency Elstat said a further 36,219 people lost their jobs in October, bringing the total to 1.35 million. That amounts to 26.8% of the population that is eligible to work, up from 26.2% in September.

Greece’s unemployment level is much higher than the euro-zone average, which stood at 11.7% in October, according to figures from the European Union’s statistics agency, Eurostat.

Elstat said Thursday the number of unemployed people in October was nearly 38% higher than a year previously.

Greece will miss tax reform goals set for this year and needs to do more to chase down wealthier tax cheats, a report by the country’s international creditors said Monday.

Greece isn’t seen achieving five out of ten goals set for December in relation to audits and tax collection, the report said, adding that changes to the legal framework and collection methods could give a major boost to revenues.

The euro zone stepped back from the brink of disaster in 2012 but a default by Greece remains a risk while Italy and Spain could pose problems. Watch Dow Jones’s Martin Essex and Geoffrey Smith assess whether life in the euro zone will be calmer in 2013 and what difference elections in Germany and Italy will make.

The much-trumpeted bond buyback that is supposed to cut Greece’s debt by €25 billion and convince the International Monetary Fund to approve a loan payment that the country desperately needs to stay above water may be successful and bring calm to the markets for the next couple of months.

But the collateral damage is high and the fundamental Greek problem is far from being resolved.

Once again the cost associated with cutting the mammoth debt fell on the private sector.

But what some fail to see is that any deal which shores up Greece does so at the expense of making the country’s multinational backers, and ultimately the guarantor of last resort, Germany, more vulnerable.

The market has a money-for-nothing feel about it. As one Tweeter pointed out incredulously, the Italian bond yield is now within three quarters of a percentage point of its all-time low. That’s its all-time low.

There is an element of self-deception here.

Following the swap, some 80% of Greek debt will be held by multinational institutions, be they the European Central Bank, the European Union or the International Monetary Fund, either directly or through their rescue vehicles.

Set aside the technical problems of buying back the debt at a discount, the deal decreases the likelihood of a Greek exit from the euro zone, therefore increases the value of outstanding holdings, which will make private-sector holders of Greek debt more reluctant to sell in anticipation of bigger gains later on. Assuming the deal goes as planned, Greece will merely be reproducing on a bigger scale the bank rescue that got the euro zone’s struggling sovereigns into trouble in the first place.

Euro-zone unemployment hit 11.7% in October, a record. It’s a record that’s bound to be broken again over the coming months.

The worst of the joblessness is concentrated in the countries roiled by banking and sovereign-debt crises. The most recent data show more than a quarter of all Greeks and Spaniards are out of work, while the jobless rate in Ireland is 14.7%, in Portugal it is 16.3% and in Italy it is 11.1%.

While everyone is hoping that the worst effects of austerity will soon start to fade and that the rest of the strugglers will start to follow the Irish example of austerity-driven restructuring leading to growth, the actual outcome is likely to be the reverse: the weaker states getting no better while the core gets worse.

Second time lucky — for this round of talks at least: we have a deal for Greece that will allow it to receive about €44 billion ($51.7 billion) to be paid in three installments early next year, assuming Greece sticks to continuing austerity measures. Here’s a selection of views from analysts and investors.

Spain’s banks are struggling with €182 billion ($232 billion) of bad debts, some 10.7% of their loan books.

Until these debts are restructured and the Spanish banking sector’s bondholders are forced to eat their losses — including the sovereign and the various multi-national agencies like the European Central Bank, which holds considerable amounts of Spanish collateral — not much is going to be resolved.

But Spain is merely a microcosm of the widespread problem of too much debt having been accumulated in the good times, now unable to be paid back.

So far, massive infusions of central bank liquidity have helped to stave off widespread bankruptcies, particularly in countries like the U.S. and U.K., where it’s been supplemented with massive fiscal transfers.

The spreadsheets spell it out clearly. Billions of euros of austerity measures on top of an already fast shrinking economy have made the country’s growing debt pile unsustainable.

As this leaves euro-zone countries to squabble with the IMF over how to reduce Greek debt, self-professed international experts continue to play the same old tune: the country’s only path to economic salvation is to leave the single currency zone.

They argue a devaluation of the national currency will boost competitiveness, exports would rise and foreign investors will snap up dirt cheap assets, contributing to job growth and economic expansion. These arguments are economically sound but overly simplistic, others argue.

Many analysts, both here in Greece — but also abroad — argue that Greece’s place in the euro zone is also crucial to ensuring Greece’s continued political stability, as well as its geopolitical influence in the volatile region of Southeast Europe and the eastern Mediterranean.